■ As of 2004 Andrew Gould was the chairman and chief executive officer of Schlumberger. Gould received a degree in economic history from the University of Wales then worked for Ernst & Young before beginning his career at Schlumberger in 1975 in the company's Internal Audit Department in Paris. In early assignments he was treasurer of Schlumberger and president of Sedco Forex, Wireline & Testing, and Oil-field Services Products. He later held the positions of executive vice president of Schlumberger Oilfield Services and then corporate president and chief operating officer. In February 2003, after heading up the firm's oilfield services operations from 1999 to 2002, Gould succeeded Euan Baird as CEO. By the mid-2000s he had also become a nonexecutive director on the board of Rio Tinto.

NEW LEADERSHIP FOR SCHLUMBERGER

When Gould assumed the lead role at Schlumberger at the beginning of 2003, he quickly outlined specific goals for the renaissance of the company, which included increasing return on capital to double digits; substantially reducing net debt; refocusing on oilfield operations through divestitures; bringing the after-tax margins of Oilfield Services and Western-Geco to 15 percent and 12 percent, respectively; and increasing earnings per share (EPS) faster than revenue. In less than two years Gould oversaw the completion of a large portion of his goals: return on capital was 13 percent in 2003, as compared to the 7 percent of 2002; net debt was $2 billion in 2004, as compared to the $4.1 billion of 2003; business divestitures of Sema, Smart Cards, and Electricity Metering, among others, raised in excess of $2 billion; and oilfield revenue and EPS in 2003 increased by 9 percent and 28 percent, respectively.

Industry analysts expected that by the end of the second quarter of 2004 Schlumberger would have returned to its oil-field service roots. Gould was credited with spurring this resurgence; investors rediscovered the company's stock, which was well on its way to reattaining a premium valuation. Additionally, during Gould's two years at the helm the company's pricing strategy was overhauled, with a more disciplined approach being instituted. Cultural change was driven by management incentives tied to margin expansion and an absence of addition of new capacity during 2003.

After Gould's appointment to the position of chairman and CEO, Schlumberger deployed the Singapore remote-connectivity teleport and the Aberdeen satellite-manufacturing facility with a second teleport. The company also introduced the ProVISION real-time reservoir-steering tool for LWD; the OrientXact perforating system; the SlimXtreme slimhole, high-pressure, high-temperature wireline logging platform; and the FlexSTONE advanced flexible cementing system. Under Gould's direction Schlumberger acquired A. Comeau and Associates, enhancing capabilities in artificially lifted wells; VoxelVision, adding high-end PC-based visualization and seismic technology; and a stake in the premier Russian oilfield services firm PetroAlliance Services Company. In 2003 Schlumberger began conducting Q-Land surveys and launched the following systems: the PowerDrive Xceed fully rotational steerable system; the MaxTRAC production-services tractor; the SeismicVISION LWD (logging while drilling) system; the LiteCRETE lightweight, high-performance cementing system; the PVT Express mobile pressure-volume-temperature laboratory; and the DecisionXpress petrophysical evaluation system.

Founded in 1924, Schlumberger was a global oilfield and information services company with major activity in the energy industry. With oil being searched out and developed across the globe, Schlumberger provided a range of oilfield services and products spanning the entire reservoir life cycle. Among its activities were seismic surveying, wireline logging (a company invention dating from 1927), directional drilling, middrilling measurement, well services from construction through completion, and integrated project management. The company employed people of more than 140 nationalities in one hundred countries through 28 service regions and consisted of three business segments: SchlumbergerSema was a leading supplier of IT consulting, systems integration, and network and infrastructure services to the energy industry as well as to the public sector and telecommunications and finance markets; the world's premier oilfield services company Schlumberger Oilfield Services supplied a wide range of technology services and solutions to the international oil and gas industry; and WesternGeco, jointly owned with Baker Hughes, was the world's largest and most advanced surface-seismic company.

MANAGEMENT STYLE

Industry watchers indicated that Gould's 2003 appointment produced a very notable change in management style at Schlumberger that was beginning to have large effects on the company, due primarily to his quick plans to realign the firm's strategic direction. Under the previous management structure Schlumberger was becoming a global technology services company leveraged to many different industries; Gould strove to refocus the company on energy services, selling some of the noncore technology components that had been built up over several years under the prior leadership. Gould's traditional and conservative style was credited with reasserting cohesion within the Schlumberger corporate culture. The company returned to being a leading force in almost every product or service it provided and produced outstanding returns in the process.

Both critics and supporters noted that Gould planned not only to divest noncore businesses but also to differentiate Schlumberger on the basis of technology and maximize profits from core activities. Observers expected that under his aggressive leadership, in keeping with the corporate objectives he laid out at the onset of his reign, and in response to changing times in the energy business, Gould would consistently find the necessary solutions. In a speech at the Lehman Brothers CEO Energy/Power Conference, Gould said, "What is sure is that if the world is going to have a reasonably priced energy supply to continue to fuel economic growth, we need to rapidly adapt to more volatile times; risk and reward opportunities will therefore abound. In these circumstances, I am confident that in the coming decade, Schlumberger will be a major benefit in the renewed investment that will be required to guarantee our energy future" (September 2, 2003).

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